ACA Road to Repeal: The AHCA Passes the House — What It Means for Employers Now

On May 4, House Republicans passed their ACA repeal bill, the American Health Care Act (AHCA). After not bringing the legislation, H.R.1628, to the House floor in late March because of lack of support, lawmakers introduced three additional amendments in order to attract additional votes. The bill is now headed to the Senate for consideration as the next step in the legislative process.

The final version of the bill passed includes federal funding for an "invisible risk sharing program," state flexibility to waive various ACA provisions (MacArthur amendment) and federal funding to offset higher costs for individuals with pre-existing conditions in states that allow premiums based on medical history when applicants have a gap in coverage (Upton amendment).

What Does the ACA Repeal Bill Mean for Employers?

National

Several AHCA provisions would impact employers if the legislation is eventually enacted. The employer shared responsibility mandate (the requirement that applicable large employers offer health coverage to their full-time employees or pay a penalty) would be eliminated — retroactive to the start of 2016. Employer reporting requirements would remain in effect for now, as ACA premium tax credits continue through the end of 2019. Starting in 2020, the AHCA would switch to a more simplified reporting system and allow employers to report coverage offers on W-2 Forms. The details of how this reporting would work (for example, would the reporting reflect offers of coverage on a month-by-month basis and also need to include covered dependents?) would be subject to additional regulations and guidance.

The Excise Tax on high cost health plans, commonly referred to as the "Cadillac Tax", would be further delayed until 2026. Current FSA contribution limits would be eliminated, and HSA contribution limits would be increased to an amount equal to the maximum out-of-pocket allowed under the ACA. Dependents would continue to be allowed to remain on a parent's health plan until age 26. Small business premium tax credits would be eliminated after 2019, and small group plans would no longer have to comply with the ACA's metal level actuarial value rules.

State-by-State

If states pursue the waivers outlined in the MacArthur amendment, there are some additional AHCA implications for employers. If states seek waivers that restrict the scope of what's considered an essential health benefit, it could have an impact on annual and lifetime benefit maximums, as well as out-of-pocket limits. Employers may be reluctant to cut benefits; however, since a robust benefits package is an excellent tool for recruitment and retention. But as employers look for ways to keep health care costs under control, this is a topic that may be addressed if the AHCA is enacted.

What Happens Next?

The AHCA now heads to the Senate, but some Senate lawmakers have already indicated that they're likely to write their own bill rather than vote on the House version. The AHCA was written as a reconciliation bill so it could pass the Senate with 51 votes rather than 60 (one of which can be a tie-breaker cast by the vice president). There are 52 Republicans in the Senate, so if more than two Republicans vote "no" on the Senate's ACA repeal measure (assuming all Democrats remain opposed), it will not pass.

The Senate has some time constraints, as the reconciliation bill is tied to the 2017 fiscal year, and the 2017 concurrent budget resolution that directed the reconciliation process for ACA repeal expires when the fiscal year ends on Sept. 30, 2017. The Senate will also have to ensure that the ACA repeal bill meets the requirements of a reconciliation bill in order to pass it with 51 votes. Some aspects of the AHCA, including the MacArthur amendment, may not be allowed under Senate reconciliation rules.

Next Steps for HR Leaders

For the time being, nothing has changed. The ACA remains the law, and employers must continue to comply with it. HR leaders must continue to track employees' hours and coverage offers with an eye toward accurate employer reporting in early 2018, keeping in mind that this will be necessary even if the ACA repeal bill is passed.

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